CMFAS Financial Advisory Ethics

Question 1

What is the primary duty of a financial adviser to their client?

Accepted Answer

To act in the best interest of the client

Answer

To maximise the adviser's commission

Answer

To sell the most expensive products

Answer

To meet sales targets

Question 2

What is the Financial Advisers Act (FAA)?

Accepted Answer

The legislation governing financial advisory services and the sale of investment products in Singapore

Answer

A tax regulation

Answer

A banking regulation

Answer

An employment law

Question 3

What is a needs analysis in financial advisory?

Accepted Answer

A process of understanding a client's financial objectives, situation, and needs

Answer

Analysing the adviser's needs

Answer

A market analysis report

Answer

A product comparison

Question 4

Why is disclosure of fees and commissions important?

Accepted Answer

It ensures transparency and helps clients make informed decisions

Answer

It is not important

Answer

It increases the adviser's income

Answer

It simplifies paperwork

Question 5

What is the suitability requirement under the FAA?

Accepted Answer

The financial adviser must ensure recommendations are suitable for the client's needs and circumstances

Answer

The product must be suitable for the adviser

Answer

The product must be the cheapest available

Answer

The client must be suitable for the adviser

Question 6

What constitutes a conflict of interest in financial advisory?

Accepted Answer

When the adviser's personal interests conflict with the client's best interests

Answer

When the adviser disagrees with the client

Answer

When two clients want the same product

Answer

When the adviser changes companies